US CEOs' confidence in business has rebounded to pre-2007 levels, according to PricewaterhouseCooper's “Annual Global CEO Survey,” and has moved back in-line with CEOs around the globe.
Almost three-fifths (56 percent) of US CEOs are very confident about business prospects over the next three years. However, their optimism is tempered by a greater focus on managing risk and competitive threats.
According to the report:
- In fact, more US CEOs (86 percent) say they are changing their strategies to allocate more senior management attention to risk management than global CEOs (72 percent) and adjusting performance incentives to account for risk (54 percent in US vs. 36 percent globally). Further, more US CEOs say they are incorporating risk scenarios into strategic planning (82 percent vs. 67 percent) and allocating more board meeting attention to risk management (68 percent vs. 58 percent).
US CEOs who indicate they are “very confident” over the next 12 months rose 10 percentage points from 2007 (35 percent) to 2010 (45 percent), after an extreme dip to 15 percent in 2008, coming closer to 2006 levels, when 53 percent of US CEOs were very confident in their outlook for revenue growth.
PwC's survey found that US CEOs are expecting to expand their operations internationally, particularly in Asia and Latin America. But growth may not come exclusively from emerging markets. Sourcing within the US seems to be a significant driver of opportunity, as CEOs outside the US see the US as both a market opportunity and a sourcing solution.
In fact, the US is second only to China — and ahead of India and Brazil — as the country most important to CEOs' sourcing needs. Business executives cite the higher quality of products and services that US companies can produce, but also list a number of other advantages: financially stable, cost-competitive suppliers; companies with decades of proven experience serving international markets; the US's extremely low overall risk profile; and business partners capable of innovating products on the fly. These attributes were also cited in President Barack Obama's State of the Union speech Tuesday night.
Leading firms in other countries are also looking to the US for market potential, PwC finds. Once again, after China, the US was the country most often named by non-US based CEOs as important to growth prospects over the next three years — ahead of Brazil, India, and Germany. US CEOs recognize these opportunities, as 68 percent say they plan to increase their commitment to generating innovations and safeguarding intellectual property over the next three years.
“Emerging-market-headquartered companies are enhancing their global networks of suppliers and partners,” said Bob Moritz, chairman and senior partner, PwC US, in a press release. “There is a tremendous potential here to create new opportunities, including jobs, to revitalize the US economy. A renewed focus on quality, innovation and talent pools — where we appear to have a competitive advantage — will further establish the US as an attractive sourcing location for these companies.”
More than half of the global and US CEOs surveyed by PwC plan to increase employee headcount during the next year. Additional analysis and the entire PwC report can be found at: Annual Global CEO Survey.